Trs. of the Eighth Dist. Elec. Pension v. JP Morgan Chase Bank, Corp.

• Decision Date: 03 February 2015
• Docket Number: Case No. 1:13-cv-00117-CWD
• Parties: THE TRUSTEES OF THE EIGHTH DISTRICT ELECTRICAL PENSION AND BENEFITS FUNDS, Plaintiff, v. JP MORGAN CHASE BANK, a Delaware Corporation, Defendant.
• Court: U.S. District Court — District of Idaho

THE TRUSTEES OF THE EIGHTH

DISTRICT ELECTRICAL PENSIONAND BENEFITS FUNDS, Plaintiff, v. JP MORGAN CHASE BANK, a Delaware Corporation, Defendant.

Case No. 1:13-cv-00117-CWD

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO

February 3, 2015

MEMORANDUM DECISION AND ORDER

INTRODUCTION

Pending before the Court are Plaintiff's ("Funds") motion to alter or amend the judgment and motion for attorney fees. (Dkt. 34, 35.) The parties have fully briefed the motions and the matters are ripe for the Court's consideration. Having fully reviewed the record herein, the Court finds the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding delay, and because the Court conclusively finds the decisional process would not be significantly aided by oral argument, the motions will be decided on the record before the Court. Dist. Idaho L. Rule7.1. For the reasons explained, the Court will grant the Funds' motion to amend the judgment and will deny the motion for attorney fees.

BACKGROUND

Portneuf Electric Inc. ("Portneuf"), an electrical contractor, entered into a Collective Bargaining Agreement with the International Brotherhood of Electrical Workers Local Union 449. As a result, Portneuf agreed to the terms and conditions of the Trust Agreements of the Plaintiff Benefit Trust Funds. The Agreement required Portneuf to contribute to the Funds for the benefit of its workers.

In 2010, Portneuf became delinquent on its obligations to the Funds, and later filed for bankruptcy under Chapter 11 of the Bankruptcy Code on September 9, 2011. Schedule B identified accounts receivables of $1,205,490.00, and personal property and equipment with an aggregate value of $481,012.63. The bankruptcy schedules indicated the Bank of Commerce ("Bank") held a secured claim in Portneuf's accounts receivables, vehicles, and equipment as of the date of the bankruptcy filing, while the Funds held a $525,000.00 unsecured nonpriority claim. Later, the bankruptcy case was dismissed for lack of ability to confirm a Chapter 11 plan.

On June 29, 2012, Battelle Energy issued Check No. 0864149 in the amount of $75,636.74 drawn on its account with U.S. Bank and made payable to "PORTNEUF ELEC & EIGHTH DISTRICT ELECT PENSION AND BENEFITS F". Hall Decl. ¶ 10 Ex. 2 (Dkt. 17-5.) The check was mailed to Portneuf. Battelle Energy intended that the Check was payable jointly to Portneuf Electric, Inc. and the Eighth District Electrical Pension and Benefits Fund. However, despite the lack of a conforming endorsementcontaining the signature of the Funds, Portneuf presented the check to Defendant JP Morgan Chase Bank ("Chase") with its endorsement, and Chase deposited the funds in Portneuf's account.

The Funds filed a one count complaint for damages against Chase for conversion under Article 3 of the Uniform Commercial Code, Idaho Code § 28-3-420, in the amount of the check plus interest.¹ On October 22, 2013, the Funds filed a motion for summary judgment. Later, on December 26, 2013, the Bank moved to intervene, claiming it had an interest in the "proceeds" of the check, because of its security interest in Portneuf's accounts receivable.

On August 29, 2014, the Court issued its memorandum decision and order granting summary judgment in favor of the Funds, and denying the Bank's motion to intervene. The Court found Chase liable for conversion under Article 3 of the Uniform Commercial Code for negotiating the check without the proper endorsement of both payees. As for the Bank, the Court denied its motion to intervene, because the check did not represent an account receivable. Rather, the Funds were suing for damages on a theory of conversion. Specifically, the Court found that "[n]ot only does the definition of an account receivable expressly exclude tort damages for conversion, the Check, and the proceeds from the check, were gone as of July 15, 2012, when the proceeds of the Check were deposited into Portneuf's account. The account receivable existed at the timeBattelle owed Portneuf money for services rendered. Portneuf received the money, and the Bank made no claim to it at the time it was paid." (Dkt. 31.)

Citing Fed. R. Civ. P. 59(e), the Funds now ask to amend the judgment entered in the amount of $75,636.74 (the face value of the check) to include prejudgment interest in the amount of $19,545.46 under Idaho Code § 28-22-104. Chase opposes the Funds' motion to amend the judgment, arguing the motion is untimely and, even if timely, should be denied because the damages were not liquidated at the time of conversion. Chase argues that, because the check was a joint check, the extent of the Funds' interest in the check was unknown, and thus its damages were as well.

The Funds also seek attorney fees in the amount of $44,180.95. The Funds claim Chase is liable for $40,111.70 under Idaho Code § 12-120(3), while the Bank should reimburse the Funds $4,069.25 under Idaho Code § 12-121 for filing a frivolous motion to intervene. Chase argues Idaho Code § 12-120(3) does not provide a basis for an award of attorney fees, because the suit was one sounding in tort for damages under a theory of conversion. And, the Bank contends it had a viable theory to pursue its interest in the check's proceeds, so it should not be held accountable under Idaho Code § 12-121 for the attorney fees spent opposing its motion to intervene.

DISPOSITION

1. Motion to Amend Under Rule 59(e)

Rule 59(e) permits parties to file a motion to alter or amend the judgment within 28 days after entry of judgment. Here, the Court entered judgment on September 9, 2014, and the Funds filed its motion on September 15, 2014. But, Chase argues the motion toamend was untimely because the Funds should have moved for prejudgment interest in its motion for summary judgment, and may not do so now, post-judgment, when there has been no clear error, new evidence, or change in controlling law. In other words, Chase contends the Funds are raising an issue that could and should have been addressed before judgment was entered.

Chase is incorrect here, and the authorities it cites do not apply. In Osterneck v. Ernst & Whinney, 489 U.S. 169, 173 (1989), the United States Supreme Court expressly held that a motion for prejudgment interest filed after the entry of judgment "constitutes a Rule 59(e) motion to alter or amend the judgment." Further, it expressly held that the appellate court "was correct to conclude that a postjudgment motion for discretionary prejudgment interest constitutes a motion to alter or amend the judgment under Rule 59(e)." 489 U.S. at 175.² The court reasoned that prejudgment interest is an element of plaintiffs' compensation. Id. Although issues may be intertwined with the merits of plaintiffs' primary case, evidence relating to the question of prejudgment interest would be available to the court at the time of disposition (whether by motion or trial), and could be decided within a reasonable time after the entry of a verdict. Id. at 175-176.

Chase's argument attempting to limit Osterneck's reach because it decided the above issue in the context of whether a motion for prejudgment interest tolled the time within which to appeal under Appellate Rule 4(a)(4) is unavailing. While it is true the Supreme Court's ultimate conclusion determined a motion for prejudgment interest was aRule 59(e) motion that rendered ineffective a later filed notice of appeal under Appellate Rule 4(a)(4),³ nothing the court expressed in Osterneck limited its ancillary holding that a discretionary (or nondiscretionary) motion for prejudgment interest was properly considered a Rule 59(e) motion.

In fact, the United States Court of Appeals for the Ninth Circuit has expressly followed Osterneck in later cases. In McCalla v. Royal MacCabees Life Ins. Co., 369 F.3d 1128, 1133 (9th Cir. 2004), the court applied Osterneck and held that a motion to include mandatory prejudgment interest, filed over one year after judgment had been entered, was not a correction of a clerical error such that Rule 60(b) rescued it from the time limitation within which to file a notice of appeal under Rule 4(a). Rather, citing Osterneck, the court explained that the plaintiff should have filed a timely Rule 59(e) motion requesting prejudgment interest. Id. at 1132-33.⁴ The court explained that applying Rule 59(e) "furthers the primary purpose of a finality rule...[because] had McCalla moved for prejudgment interest within 10 days of the judgment from which he originally appealed, the district court would have ruled on the motion before that judgment became final." Id. at 1132. See also Johnson v. Neilson (In re Slatkin), 525 F.3d 805, 820 (9th Cir. 2008) (finding that the court could, under Osterneck, properly decide the issue of prejudgment interest after entry of judgment following a jury trial); Pogor v.Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir. 1998) (finding Rule 59(e) would allow for a later motion to fix interest when the court's original judgment does not mention an award of interest).

Finally, the Court does not find the cases Chase cited in support of its position persuasive. The cases cited all pertain to the standard of review when a court is presented with a motion to reconsider matters already argued or asserting additional arguments, not to Rule 59(e) motions to amend the judgment to add prejudgment interest. For example, Novato Fire Prot. Dist. v. U.S., 181 F.3d 1135, 1142 n.6 (9th Cir. 1999), explained that the district court did not abuse its discretion when it declined to reconsider an argument pertaining to the merits of the court's summary judgment decision. Similarly, in Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000), the court was confronted with a rule 59(e) motion arguing, for the first time, that the claims made in the complaint should be considered under a new theory never raised during the summary judgment proceedings.

And, this Court has...